Foreclosure Mediation Update

Here is another in a series of updates on the development of foreclosure mediation in the United States by Mediate.com News Editor, Keith Seat.

Update on Home Foreclosure Mediation

Oregon was prepared for large numbers of mortgage foreclosure mediations after legislation took effect in mid-July 2012, but has had only one homeowner go through mediation in the first four months.  The state’s mediation program applies only to non-judicial foreclosures, which nearly came to a complete stop following the new mediation requirements and an unrelated appellate court ruling on lenders’ recording practices.  By contrast, the number of judicial foreclosures has more than tripled and an additional surge of foreclosure cases may be coming.  Efforts are under way to obtain legislative solutions, including changes to the foreclosure mediation program to clarify notification requirements and define at-risk homeowners, along with more controversial proposals, such as expanding the mediation program to cover judicial as well as non-judicial foreclosures.  Oregon Live (December 22, 2012); The Oregonian (November 19, 2012); Loan Safe (November 15, 2012)

The new St. Louis (Missouri) County ordinance requiring lenders to offer mediation to homeowners facing foreclosure has been upheld by a local court against challenges from banks.  The court determined that the ordinance was within the police power of the county, that the $350 mediation fee required from lenders was not a tax, and that there is no conflict with state law or preemption.  The ordinance requires that written notice of a homeowner’s right to request mediation be given within 20 days and good faith participation by the lender if the homeowner decides to mediate.  After the decision, a county counselor stated that similar ordinances might be enacted across the state, including one under development in St. Louis City.  Missouri Banks Assoc. v. St. Louis County, Missouri, No. 12SL-CC03659 (Mo. Cir. Ct., November 14, 2012); St. Louis Public Radio (November 14, 2012)

The Nevada Supreme Court amended the rules of the state’s foreclosure mediation program, effective January 1, to make mediators subject to codes of conduct, enhance the process for exchanging documents, and incorporate numerous other changes.  Nevada Bar (December 14, 2012); Nevada Supreme Court Order (December 6, 2012)

Connecticut strongly objected to a Federal Housing Finance Agency proposal to increase guarantee fees for Connecticut mortgages, as well as those in New York, New Jersey, Illinois and Florida, due to allegedly imposing excessive foreclosing costs on Fannie Mae and Freddie Mac by extending the timeline for foreclosure through legal protections, including mediation.  Connecticut set out the extensive benefits from mediation, which it calculates to be about $42.6 million in savings per year for foreclosing owners from the 82% of mediations in which both parties end up better off, compared with the FHFA’s claim of $14.9 million in excessive costs by focusing only on the 18% of mediations that eventually ended in foreclosure.  Equities (November 13, 2012)

The New Jersey legislature is considering a bill to codify the state’s Foreclosure Mediation Program in order to make permanent the approach developed by the state judiciary in 2009.  Foreclosure filing fees and fines would continue to fund the program on an ongoing basis.  JD Supra (November 7, 2012)

Washington state homeowners facing foreclosure have the right to mediation under state legislation that took effect in July 2012, but fewer than 10% of those eligible have sought mediation under the program.  One law firm is offering public seminars to teach homeowners about foreclosure options, including mediation, and notes that a great number of clients are obtaining modified loans and dramatic reductions in monthly loan payments.  Digital Journal (December 19, 2012)

While the rate of home foreclosures is slowing nationwide, significant improvements in Washington, D.C. are being attributed to the availability of home foreclosure mediation as well as general improvements in the market. 

                       

Keith Seat

Keith L. Seat is a full-time mediator and arbitrator who can effectively assist parties in resolving a wide range of telecommunications, antitrust and other commercial disputes. With over twenty years of legal experience as a mediator, arbitrator, litigator, advocate before executive branch agencies, and key staffer in the legislative and… MORE >